It was a fairly quiet start to the week for the live cattle trade with ranges from high to low of less than $1 in everything. Feeders traded in a moderately broader range, but the closes in the cattle complex were all just quietly higher, aside from the front month April fats that were in the red. Hogs finished on the plus side in everything but the June contract with ranges from high to low that were pushing out close to $2, so the volatility was definitely still present despite the lackluster net changes at the finish.
In the pork market, a new record one week export sales tally was posted last week in Thursday’s data with over 90k mt’s in total sales and 70k+ of that going to China alone. That shattered previous records. Before those numbers hit, most contract months weren’t trading very far off of recent contract high territory and after they hit, the April, May, June and August contracts still couldn’t muster a push into new highs. October and beyond contracts hit new high water marks though and I think that keeps bullish momentum intact.
Huge pork sales and higher hog trade isn’t just beneficial to the hogs either. Competing meats stand a good chance at gaining market share as long as pork keeps rising, which makes the entire meat situation much friendlier than it was before China stepped in the ring as a major pork buyer. Pork cutouts are now less than $13 off the $100 mark, choice beef cutouts pushed up over the $230 level yesterday and that put the choice beef to pork cutout price ratio at 2.65:1. That’s the weakest beef has traded relative to pork in the month of April in over 4 years. We’re also sitting here now looking at a pork cutout price that’s over $18 higher than the same week last year. Despite the fact that’s equivalent to sitting in the nosebleed seats, especially with pork production slated to increase dramatically in 2019 versus 2018 here in the US, if China stays strongly in the mix on the buy side in exports, there’s still more upside potential.
Cattle slg.___121,000 +1k wa +6k ya
Choice Cutout__230.98 +2.23
Select Cutout___221.22 +.20
Feeder Index:___142.99 +.23
Lean Index.__79.57 +.23
Pork cutout___87.04 +1.33
IA-S.MN direct avg__77.84 +.86
Hog slg.___436,000 -49k wa -25k ya
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Grain and oilseed trade was pretty quiet once again in the fall crop markets of corn and soybeans. Wheat was a little more aggressive to the downside and with sunshine and decent soil moisture over a good part of HRW wheat country still, pressure in the KC Wheat market was the heaviest.
That good soil moisture isn’t all inclusive though with reports starting to trickle in regarding some southern Kansas and western Oklahoma wheat ground that missed the last rain event or two and are showing some stress. That wasn’t evidenced in the crop condition ratings yesterday though, with g/ex conditions in HRW wheat states unchanged at 62%. Topsoil moisture levels in Kansas were 3% short and the rest adequate to surplus. Oklahoma was 89% adequate to surplus, 10% short and 1% very short. Texas was 36% short to very short and 64% adequate to surplus. Subsoil moisture ratings were 98% adequate to surplus in Kansas, 85% adequate to surplus in Oklahoma and 69% adequate to surplus in Texas.
Overall winter wheat ratings were unchanged as well at 60% g/ex. The percent of the winter wheat crop heading was 6%, up 3 points from last week, but also 3 points behind the average pace for this week. Spring wheat seeding moved from 1% complete last week to 2% complete in yesterday’s numbers. The 5 year average is 13% complete.
Corn planting progress came out for the first time yesterday with 3% of the crop in the ground versus 5% as the 5 year average. Progress in some of the top states showed Kansas 6% done, Indiana 1%, Missouri 6% and the rest at less than 1%.
Export inspections that came out midmorning yesterday were only mildly depressing in corn, but thoroughly depressing in everything else. Corn export loadings were 46.5 mln bushels versus a pace needed every week to hit USDA’s export target of 52.2 mln. Soybeans need 37.4 mln bushels every week to hit the target and came in at just 16.9 mln yesterday. Milo needs 2.2 mln and we got 452k bushels yesterday. Wheat needs 30.5 mln bushels a week between now and the end of May and the total yesterday was 18.8 mln. Wheat sales are going to hit USDA’s target more than likely, but there’s only an ultra-slim chance the actual shipments meet what is needed.
Funds yesterday were sellers of 3k wheat and buyers of 4k corn and 3k beans.
6-10’s last night showed above normal temperatures over the entire Plains and Corn Belt. Precip chances are above normal over all of the Plains and the vast majority of the Corn Belt. The exception was the southern 1/3 of Illinois, half of Indiana and most of Ohio and east being below normal on precip.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com